Latest tax-the-rich ballot initiative splits Democrats

For the third time in a decade, voters have a chance to raise taxes on the rich, but this time the money would pay for electric vehicles and charging stations instead of schools and community colleges, a distinction that has drawn opposition from key supporters of those previous tax hikes.

Voters like taxes someone else has to pay, and have already raised or reasserted income taxes on high earners twice in the last 10 years.

Both times, though, tax revenue was directed to education. Both times, the measures enjoyed the backing of the influential California Teachers Association, which spent more than $20 million. Both measures were successful.

The money, should it materialize, ought to go to public schools. That’s how CTA sees it.

If that was an emerging pattern, a measure on this year’s ballot would end it.

The ride-hailing company Lyft has pumped at least $8 million into Proposition 30, and is hoping voters will raise taxes on income over $2 million and use the revenue on charging stations and incentives for electric vehicle ownership.

But that money, should it materialize, ought to go to public schools. That’s how CTA sees it.

High-earner income-tax dollars “traditionally would fund transitional kindergarten, public schools, community colleges,” according to a statement from CTA president E. Toby Boyd. If voters approve Lyft’s proposal, they’ll be putting “a lock box” on an important revenue stream.

The initiative is a “cynical scheme devised by a single corporation to funnel state income tax revenue to their company.” — Gavin Newsom

Gov. Gavin Newsom, a dependable education advocate who received a million CTA dollars for his initial election and nearly $2 million more to fend off a recall, also opposes the measure.

“Prop. 30 is a special interest carve-out,” he said, “a cynical scheme devised by a single corporation to funnel state income tax revenue to their company.”

Others, including the California Democratic Party, disagree.

“It is supported by a long list of labor unions, state firefighters, environmental groups, public health groups, the California Democratic Party, and more who believe that protecting Californians from climate change and wildfires is more important than protecting billionaires from paying their fair share,” said a statement from the Yes on 30 campaign.

Electricians and other building trade unions,  including the powerful State Building and Construction Trades Council, which stand to benefit from a boom in EV infrastructure construction, support Proposition 30. In all, however, labor remains divided on the issue.

Support comes primarily from Lyft, as well as some environmentalists.

“California’s tax revenues are famously volatile, and this measure would make our state’s finances more unstable.” — Gavin Newsom

Proposition 30 would add 1.75 percent to a top tax bracket for income over $2 million a year. The rate would rise from 13.3 percent to 15.05 percent. Until voters raised it in 2012, the top rate had been 10.3 percent.

Such a tax could generate as much as $4.5 billion a year toward the state’s zero-emission vehicle goals.

But it also exacerbates the state’s overreliance on the rollercoaster income streams of the very rich, making the state embarrassingly wealthy in good times, and struggling with insolvency in bad.

“California’s tax revenues are famously volatile, and this measure would make our state’s finances more unstable,” the governor said, “all so that special interests can benefit.”

Newsom noted that this year’s budget includes $10 billion for electric vehicles and infrastructure, and called Proposition 30 “fiscally irresponsible.”

That apparently was not the case in 2012, when voters were first presented with a wealth tax. The measure (also designated Proposition 30) raised the sales tax from 7.25 percent to 7.5 percent.

That ushered in Proposition 55 of 2016. Gone was the sales tax increase – which took from rich and poor alike.

Nearly all of that money, 89 percent, was directed at K-12 schools. CTA was among those in support. It passed with 55 percent of the vote.

The entire tax increase, however, was set to expire in 2016. By 2016, unsurprisingly, education advocates and others thought the taxes – at least the popular ones – should be increased permanently.

That ushered in Proposition 55 of 2016. Gone was the sales tax increase – which took from rich and poor alike. Remaining was the high-end income tax. Together, hospitals and educators spent nearly $60 million to convince voters. And voters were overwhelmingly convinced, passing the measure with 63 percent of the vote.

All of that left the top income tax rate at 13.3.

This year, if (the current) Proposition 30 passes, California’s millionaire tax will jump past 15 percent. California already has the highest high-end income rates in the country. Hawaii is second, with 11 percent, trailed closely by New Jersey at 10.75 percent.